Exhibit 1.1
Shares
Rackable Systems,
Inc.
Common Stock
UNDERWRITING
AGREEMENT
, 2006
T HOMAS W EISEL P ARTNERS LLC
C OWEN & C O .,
LLC
P ACIFIC C REST S ECURITIES I NC
.
RBC C APITAL M ARKETS C ORPORATION
As Representatives of the
several
Underwriters
named in Schedule 1 hereto,
c/o Thomas Weisel Partners
LLC
One Montgomery Street, Suite
3700
San Francisco, California
94104
Dear Sirs:
Rackable Systems, Inc., a Delaware
corporation (the “ Company ”), proposes to issue
and sell
shares (the “ Company Firm Stock ”) of the
Company’s Common Stock, par value $0.001 per share (the
“ Common Stock ”), and certain stockholders of
the Company named in Schedule 2 hereto (the “ Selling
Stockholders ”) propose severally to sell an aggregate of
shares of Common Stock (the “ Selling Stockholder Firm
Stock ” and, together with the Company Firm Stock, the
“ Firm Stock ”).
It is understood that, subject to
the conditions hereinafter stated, the Firm Stock will be sold to
the several Underwriters named in Schedule 1 hereto (the “
Underwriters ”) in connection with the offering and
sale of such Firm Stock. Thomas Weisel Partners LLC,
Cowen & Co., LLC, Pacific Crest Securities Inc. and RBC
Capital Markets Corporation shall act as representatives (the
“ Representatives ”) of the several
Underwriters.
In addition, the Company and certain
of the Selling Stockholders propose to grant to the Underwriters an
option to purchase up to an additional
shares of the Common Stock on the terms and for the purposes set
forth in Section 3 (the “ Option Stock ”).
The Firm Stock and the Option Stock, if purchased, are hereinafter
collectively called the “ Stock .” This
underwriting agreement (this “ Agreement ”)
shall confirm the agreement concerning the purchase of the Stock
from the Company and the Selling Stockholders by the
Underwriters.
SECTION 1. Representations,
Warranties and Agreements of the Company. The Company represents,
warrants and agrees that:
(a) A registration statement on Form
S-1 with respect to the Company, the Selling Stockholders and the
Stock has (i) been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the
“ Securities Act ”), and the rules
and
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regulations (the “ Rules and
Regulations ”) of the Securities and Exchange Commission
(the “ Commission ”) thereunder, (ii) been
filed with the Commission under the Securities Act and
(iii) become effective under the Securities Act. Copies of
such registration statement and each of the amendments thereto have
been delivered by the Company to you. As used in this Agreement,
“ Effective Time ” means the date and the time
as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by
the Commission; “ Effective Date ” means the
date of the Effective Time; “ Preliminary Prospectus
” means each prospectus included in such registration
statement, or amendments thereof, before it became effective under
the Securities Act and any prospectus filed with the Commission by
the Company with the consent of the Representatives pursuant to
Rule 424(a) of the Rules and Regulations; “ Sale
Preliminary Prospectus ” means the preliminary prospectus
identified in Schedule 5 hereto, as supplemented by and taken
together with each “issuer free writing prospectus,” as
defined in Rule 433 of the Rules and Regulations (“ Issuer
Free Writing Prospectus ”), relating to the Stock that is
listed on Schedule 6 hereto (each, an “ Identified Issuer
Free Writing Prospectus ”); “ Registration
Statement ” means such registration statement, as amended
at the Effective Time, including all information contained in the
final prospectus filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations and deemed to be a part of the
registration statement as of the Effective Time pursuant to Rule
430A of the Rules and Regulations; and “ Prospectus
” means the prospectus first filed with the Commission
following the Effective Time pursuant to Rule 424(b) of the Rules
and Regulations. If the Company has filed an abbreviated
registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Securities Act (the “
Rule 462 Registration Statement ”), then any reference
herein to the term “ Registration Statement ”
shall be deemed to include such Rule 462 Registration Statement.
The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, Prospectus or Issuer Free
Writing Prospectus.
(b) The Sale Preliminary Prospectus
and the Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or
the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations
and do not and will not, as of the applicable effective date (as to
the Registration Statement and any amendment thereto), as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) and as of the time of sale (including, without
limitation, a contract of sale) of the Stock (as to the Sale
Preliminary Prospectus and any amendment or supplement thereto)
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; each Identified Issuer Free
Writing Prospectus does not conflict with the information contained
in the Registration Statement; provided that no representation or
warranty is made as to information contained in or omitted from the
Registration Statement, the Prospectus or the Sale Preliminary
Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by
or on behalf of any Underwriter specifically for inclusion
therein.
(c) The Company has no
“subsidiaries” (as defined in Section 17 hereof)
other than Rackable Systems Limited, a company incorporated under
the laws of Ireland (the “ Subsidiary ”). The
Subsidiary is not a “significant subsidiary,”
as such term is defined in Rule 405 of the Rules and
Regulations.
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(d) The Company and the Subsidiary
have been duly incorporated and are validly existing as
corporations in good standing (or the foreign equivalent thereof)
under the laws of their respective jurisdictions of incorporation,
are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, except where the failure to
so qualify would not reasonably be expected to result in a material
adverse effect on the condition, financial or otherwise, or on the
results of operations, financial position, business, operations or
prospects of the Company and the Subsidiary, taken as a whole (such
an effect, a “ Material Adverse Effect ”), and
has all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they
are engaged.
(e) The Company has an authorized
capitalization as set forth in each of the Sale Preliminary
Prospectus and the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable, were issued in
compliance with federal and state securities laws and conform to
the description thereof contained in each of the Sale Preliminary
Prospectus and the Prospectus; and all of the issued shares of
capital stock of the Subsidiary have been duly and validly
authorized and issued and are fully paid and non-assessable and
(except for directors’ qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims. All of the Company’s
options, warrants and other rights to purchase or exchange any
securities for shares of the Company’s capital stock have
been duly and validly authorized and issued, were issued in
compliance with federal and state securities laws, and conform to
the description thereof contained in each of the Sale Preliminary
Prospectus and the Prospectus.
(f) The shares of the Stock to be
issued and sold by the Company to the Underwriters hereunder have
been duly and validly authorized and, when issued and delivered
against payment therefor in accordance with this Agreement, will be
duly and validly issued, fully paid and non-assessable; and the
Stock will conform to the descriptions thereof contained in the
Prospectus. Upon payment for and delivery of the Stock to be sold
by the Company pursuant to this Agreement, the Underwriters will
acquire good and valid title to such Stock, in each case free and
clear of all liens, encumbrances, equities, preemptive rights,
subscription rights, other rights to purchase, voting or transfer
restrictions and other similar claims.
(g) The Company has all requisite
corporate power and authority to enter into this Agreement, and
this Agreement has been duly authorized, executed and delivered by
the Company.
(h) The execution, delivery and
performance of this Agreement and each of the other documents to be
entered into in connection with the Transactions (as defined in
Section 3 hereof) by the Company and the consummation of the
transactions contemplated hereby and thereby will not
(i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or the Subsidiary is a
party or by which the Company or the Subsidiary is bound or to
which any of the property or assets of the
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Company or the Subsidiary is subject,
(ii) result in any violation of the provisions of the
certificate of incorporation, by-laws or other charter documents of
the Company or the Subsidiary or any statute or (iii) result
in any violation of any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
the Subsidiary or any of their properties or assets; and except for
the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Exchange Act
of 1934, as amended (the “ Exchange Act ”), and
applicable state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement or any of
the other documents to be entered into in connection with the
Transactions by the Company and the consummation of the
transactions contemplated hereby and thereby.
(i) Except as described in each of
the Sale Preliminary Prospectus and the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act. The
holders of outstanding shares of the Company’s capital stock
are not entitled to preemptive or other rights to subscribe for the
Stock. Except as disclosed in each of the Sale Preliminary
Prospectus and the Prospectus, upon completion of the offering, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of, or
ownership interests in, the Company are outstanding.
(j) Except for stock issuances
disclosed in the Registration Statement, the Company has not sold
or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant
to Rule 144A under, or Regulations D or S of, the Securities Act,
other than shares of Common Stock issued upon exercise of stock
options granted pursuant to the Company’s equity incentive
plans, which plans are described in each of the Sale Preliminary
Prospectus and the Prospectus.
(k) The Company and the Subsidiary,
taken as a whole, have not sustained, since the date of the latest
audited financial statements included in the Sale Preliminary
Prospectus, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth
or contemplated in each of the Sale Preliminary Prospectus and the
Prospectus; and, since such date, there has not been any change in
the capital stock or long-term debt of the Company or the
Subsidiary or any material adverse change, or any development
involving a prospective material adverse change, in or affecting
the general affairs, management, consolidated financial position,
stockholders’ equity, results of operations, business or
prospects of the Company and the Subsidiary, taken as a whole,
otherwise than as set forth or contemplated in each of the Sale
Preliminary Prospectus and the Prospectus.
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(l) The financial statements
(including the related notes and supporting schedules) filed as
part of the Registration Statement or included in the Sale
Preliminary Prospectus or the Prospectus present fairly the
financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved. The Company does not have any
off-balance sheet obligation or material liability of any nature
(matured or not matured, fixed or contingent) to, or any financial
interest in, any third party or unconsolidated entity other than as
set forth in the financial statements (including the related notes
and supporting schedules) filed as part of the Registration
Statement or included in the Sale Preliminary Prospectus or the
Prospectus.
(m) Deloitte & Touche LLP
(“ Deloitte & Touche ”), which has
certified certain financial statements of the Company, whose report
appears in each of the Sale Preliminary Prospectus and the
Prospectus and which has delivered the initial letter referred to
in Section 9(h) hereof, has confirmed to us that they are
independent registered public accountants as required by the
Securities Act and the Rules and Regulations.
(n) Neither the Company nor the
Subsidiary owns any real property. The Company and the Subsidiary
have good and valid title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects,
except such as are described in each of the Sale Preliminary
Prospectus and the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the
use made and proposed to be made of such property by the Company
and the Subsidiary, taken as a whole; and all assets held under
lease by the Company and the Subsidiary are held by them under
valid, subsisting and enforceable leases, with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company
and the Subsidiary.
(o) The Company and the Subsidiary
carry, or are covered by, insurance in such amounts and covering
such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar
industries.
(p) Except as disclosed in each of
the Sale Preliminary Prospectus and the Prospectus and the
Registration Statement, the Company and the Subsidiary own or
possess adequate rights or licenses to use all material patents,
patent applications, trademarks, service marks, trade names, domain
names, trademark registrations, service mark registrations and
copyrights necessary for the conduct of their respective businesses
and do not believe that the conduct of their respective businesses
will conflict with, and have not received any notice of any claim
of conflict with, any such rights of others.
(q) There are no legal or
governmental proceedings pending to which the Company or the
Subsidiary is a party or of which any property or assets of the
Company or the Subsidiary is the subject which, if determined
adversely to the Company or the Subsidiary, might have a Material
Adverse Effect; and to the best of the Company’s knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
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(r) There are no contracts or other
documents which are required to be described in the Sale
Preliminary Prospectus and the Prospectus or filed as exhibits to
the Registration Statement by the Securities Act or by the Rules
and Regulations which have not been described in each of the Sale
Preliminary Prospectus and the Prospectus or filed as exhibits to
the Registration Statement.
(s) No relationship, direct or
indirect, exists between or among the Company on the one hand, and
the directors, officers, stockholders, customers or suppliers of
the Company on the other hand, which is required to be described in
the Sale Preliminary Prospectus and the Prospectus which is not so
described.
(t) No labor disturbance by the
employees of the Company or the Subsidiary exists or, to the
knowledge of the Company, is imminent, which might be expected to
have a Material Adverse Effect.
(u) The Company is in compliance in
all material respects with all presently applicable requirements
and provisions of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder (“ ERISA ”) and the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
including the regulations and published interpretations thereunder
(“ COBRA ”); no “ reportable event
” (as defined in ERISA) has occurred with respect to any
“ pension plan ” (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred
and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any
“ pension plan ” or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the
“ Code ”); and each “ pension plan
” for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss
of such qualification.
(v) The Company has filed all
federal, state and local income, sales and franchise tax returns
required to be filed through the date hereof and has paid all taxes
due thereon, and no tax deficiency has been determined adversely to
the Company or the Subsidiary which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined
adversely to the Company or the Subsidiary, might have) a Material
Adverse Effect.
(w) Since the date as of which
information is given in the Sale Preliminary Prospectus through the
date hereof, and except as may otherwise be disclosed in each of
the Sale Preliminary Prospectus and the Prospectus, the Company has
not (i) issued or granted any securities, other than stock
options granted pursuant to the Company’s equity incentive
plans, which plans are described in each of the Sale Preliminary
Prospectus and the Prospectus, (ii) incurred any liability or
obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business,
(iii) entered into any transaction not in the ordinary course
of business, (iv) declared or paid any dividend on its capital
stock or (v) entered into any “off balance sheet
arrangements” as such term is defined under
Item 303(a)(4) of Regulation S-K of the Rules and
Regulations.
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(x) The Company (i) makes and
keeps accurate books and records and (ii) maintains internal
accounting controls which provide reasonable assurance that
(A) transactions are executed in accordance with
management’s authorization, (B) transactions are
recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets,
(C) access to its assets is permitted only in accordance with
management’s authorization, (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals and (E) material information related to
such controls is reported or otherwise made known to the
Company’s Chief Executive Officer and Chief Financial
Officer.
(y) Neither the Company nor the
Subsidiary is in (i) violation of its certificate of
incorporation, by-laws or other charter documents,
(ii) default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject or
(iii) violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of
its property or to the conduct of its business.
(z) Neither the Company nor the
Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or other person associated with or acting
on behalf of the Company or the Subsidiary, has used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(aa) There has been no storage,
disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous
wastes or hazardous substances by the Company or the Subsidiary at,
upon or from any of the property now or previously owned or leased
by the Company or the Subsidiary in violation of any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit
or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit,
except for any violation or remedial action which would not have,
or would not be reasonably likely to have, individually or in the
aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto
such property or into the environment surrounding such property of
any toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or the
Subsidiary or with respect to which the Company has knowledge,
except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not have or would not be
reasonably likely to have, individually or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms
“ hazardous wastes ”, “ toxic
wastes ”, “ hazardous substances ” and
“ medical wastes ” shall have the meanings
specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.
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(bb) Neither the Company nor the
Subsidiary is, nor, as of the applicable Delivery Date (as defined
in Section 5 hereof) after giving effect to the Transactions
and the application of the net proceeds therefrom as described in
the Prospectus, will be, an “investment company” as
defined in the Investment Company Act of 1940, as
amended.
(cc) On or prior to the applicable
Delivery Date, each of the documents to be entered into in
connection with the Transactions (other than this Agreement) will
have been duly authorized, executed and delivered by the Company in
substantially the form previously provided to the Underwriters and
will conform to the descriptions thereof in each of the Sale
Preliminary Prospectus and the Prospectus.
(dd) The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the Exchange Act), which
(i) are designed to ensure that material information relating
to the Company, including the Subsidiary, is made known to the
Company’s principal executive officer and its principal
financial officer by others within those entities, particularly
during the periods in which the periodic reports will be required
under the Exchange Act are being prepared; (ii) have been
evaluated for effectiveness; and (iii) are effective in all
material respects to perform the functions for which they were
established.
(ee) Based on the evaluation of its
disclosure controls and procedures, the Company is not aware of
(i) any significant deficiency or material weakness in the
design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role
in the Company’s internal controls over financial
reporting.
(ff) Since the date of the most
recent evaluation of such disclosure controls and procedures, there
have been no significant changes in internal controls or in other
factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
(gg) The Company is in compliance in
all material respects with applicable provisions of the
Sarbanes-Oxley Act of 2002, the rules and regulations of the
Commission and the Nasdaq National Market that pertain thereto that
are effective and is actively taking steps to ensure that it will
be in compliance in all material respects with other applicable
provisions of the Sarbanes-Oxley Act of 2002, the rules and
regulations of the Commission and the Nasdaq National Market that
pertain thereto upon the effectiveness of such
provisions.
(hh) Neither the Company, nor to the
Company’s knowledge, any of its affiliates, has taken or may
take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or
resale of the Stock. The Company acknowledges that the Underwriters
may engage in passive market making transactions in the Stock on
the Nasdaq National Market in accordance with Regulation M under
the Exchange Act.
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(ii) The Company has not made any
offer relating to the Stock that would constitute a “ Free
Writing Prospectus ” as defined in Rule 405 under
the Securities Act other than by means of the Identified Issuer
Free Writing Prospectuses or a “ bona fide electronic road
show ” as defined in Rule 433(h)(5) under the Securities
Act. The Company has complied with the requirements of
Rule 433 under the Securities Act applicable to any Issuer
Free Writing Prospectus, including timely filing with the
Commission or retention where required and legending, and the
Company has satisfied the conditions under Rule 433 to avoid a
requirement to file with the Commission any electronic road
show.
SECTION 2. Representations,
Warranties and Agreements of the Selling Stockholders. Each
Selling Stockholder severally and not jointly represents, warrants
and agrees that:
(a) The Selling Stockholder has and
immediately prior to the applicable Delivery Date (as defined in
Section 5 hereof) the Selling Stockholder will have good and
valid title to the Stock to be sold by the Selling Stockholder
hereunder on such date, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of such shares and payment
therefor pursuant hereto, good and valid title to such shares, free
and clear of all liens, encumbrances, equities or claims, will pass
to the several Underwriters.
(b) The Selling Stockholder has
placed in custody under a Custody Agreement (the “ Custody
Agreement ” and, together with all other similar
agreements executed by the other Selling Stockholders, the “
Custody Agreements ”) with American Stock
Transfer & Trust Company, as custodian (the “
Custodian ”), for delivery under this Agreement,
certificates in negotiable form (with signature guaranteed by a
commercial bank or trust company having an office or correspondent
in the United States or a member firm of the New York or American
Stock Exchanges) representing the Stock to be sold by the Selling
Stockholder hereunder.
(c) The Selling Stockholder has duly
and irrevocably executed and delivered a power of attorney (the
“ Power of Attorney ” and, together with all
other similar instruments executed by the other Selling
Stockholders, the “ Powers of Attorney ”)
appointing the persons named therein as attorneys-in-fact, with
full power of substitution, and with full authority (exercisable by
any one or more of them) to execute and deliver this Agreement on
such Selling Stockholder’s behalf and to take such other
action as may be necessary or desirable to carry out the provisions
hereof on behalf of the Selling Stockholder.
(d) The Selling Stockholder has full
right, power and authority to enter into this Agreement, the Power
of Attorney and the Custody Agreement; the execution, delivery and
performance of this Agreement, the Power of Attorney and the
Custody Agreement by the Selling Stockholder, the compliance by the
Selling Stockholder with all of the applicable provisions of this
Agreement, the Power of Attorney and the Custody Agreement, and the
consummation by the Selling Stockholder of the Transactions and the
other transactions contemplated hereby and thereby will not
(i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling Stockholder is
a
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party or by which the Selling Stockholder is
bound or to which any of the property or assets of the Selling
Stockholder is subject, unless such conflict, breach, violation or
default would not adversely affect such Selling Stockholder’s
ability to perform any of its obligations under this Agreement, the
Power of Attorney and the Custody Agreement or any of the
transactions contemplated hereby and thereby, (ii) result in
any violation of the provisions of any partnership or limited
liability company agreement, certificate of incorporation, by-laws,
operating agreement, deed of trust or other similar agreement or
organizational document of each Selling Stockholder that is not a
natural person or (iii) result in any violation of any statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Selling Stockholder or
the property or assets of the Selling Stockholder; and except for
the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase
and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the
Power of Attorney or the Custody Agreement by the Selling
Stockholder, the compliance by the Selling Stockholder will all of
the applicable provisions of this Agreement, the Power of Attorney
and the Custody Agreement, and the consummation of the Transactions
and the other transactions contemplated hereby and
thereby.
(e) If listed on Schedule 4 hereto,
to the knowledge of such Selling Stockholder, the Registration
Statement, the Prospectus and the Sale Preliminary Prospectus, and
any further amendments or supplements to the Registration
Statement, the Prospectus or the Sale Preliminary Prospectus will,
when they become effective or are filed with the Commission, as the
case may be, do not and will not, as of the applicable effective
date (as to the Registration Statement and any amendment thereto),
as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) and as of the time of sale
(including, without limitation, a contract of sale) of the Stock
(as to the Sale Preliminary Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided that no representation or warranty is made as to
information contained in or omitted from the Registration
Statement, the Prospectus or the Sale Preliminary Prospectus in
reliance upon and in conformity with written information furnished
to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein.
(f) The information with respect to
such Selling Stockholder contained in the Registration Statement,
the Prospectus or the Sale Preliminary Prospectus (as amended or
supplemented), as of the applicable date set forth in each of the
Prospectus and the Sale Preliminary Prospectus , that is
based upon information furnished to the Company by such Selling
Stockholder in writing does not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(g) If listed on Schedule 4 hereto,
such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in
Section 1 hereof are not materially true and
correct.
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(h) The Selling Stockholder has not
taken and will not take, directly or indirectly, any action
prohibited by Regulation M under the Securities Act with respect to
the Stock.
(i) The Selling Stockholder is not
prompted to sell shares of Common Stock by any material information
concerning the Company which is not set forth in the Registration
Statement, the Prospectus and the Sale Preliminary
Prospectus.
(j) This Agreement has been duly
authorized, executed and delivered by or on behalf of the Selling
Stockholder.
SECTION 3. Purchase of the Stock
by the Underwriters. On the basis of the representations and
warranties contained in, and subject to the terms and conditions
of, this Agreement, the Company agrees to sell
shares of the Firm Stock and each of the Selling Stockholders
agrees to sell the number of shares of the Firm Stock listed beside
its name on Schedule 2 hereto, to the several Underwriters, and
each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set forth opposite
that Underwriter’s name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm
Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Company and the
Selling Stockholders listed on Schedule 3 hereto grant to the
Underwriters an option to purchase the number of shares of Option
Stock set forth opposite their names on Schedule 3. Such option is
granted for the purpose of covering over-allotments in the sale of
Firm Stock and is exercisable as provided in Section 5 hereof.
Shares of Option Stock shall be purchased severally for the account
of the Underwriters in proportion to the number of shares of Firm
Stock set forth opposite the name of such Underwriters in Schedule
1 hereto. If the over-allotment option is less than fully
exercised, the Underwriters will purchase shares from the Company
and the Selling Stockholders listed on Schedule 3 on the basis set
forth on Schedule 3. The respective purchase obligations of each
Underwriter with respect to the Option Stock shall be adjusted by
the Representatives so that no Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts.
The price of both the Firm Stock and
any Option Stock shall be $ .
per share. The Company’s and
the Selling Stockholders’ sale of the Firm Stock and the
Company’s and certain of the Selling Stockholders’ sale
of any Option Stock to the Underwriters and the related
transactions between or among any or all of, the Company, the
Selling Stockholders and the Underwriters, being collectively
referred to as the “ Transactions .”
Neither the Company nor any of the
Selling Stockholders shall be obligated to deliver any of the Stock
to be delivered on any Delivery Date, except upon payment for all
the Stock to be purchased on such Delivery Date as provided
herein.
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SECTION 4. Offering of Stock by
the Underwriters. Upon authorization by the Representatives of
the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.
SECTION 5. Delivery of and
Payment for the Stock. Delivery of and payment for the Firm
Stock shall be made at the offices of Cooley Godward LLP, 3175
Hanover Street, Palo Alto, California, 94304, at 10:00 A.M., New
York City time, on the fourth full business day following the date
of this Agreement or at such other date or place as shall be
determined by agreement between the Representatives and the
Company. This date and time are sometimes referred to as the
“ First Delivery Date .” On the First Delivery
Date, the Company (with respect to the Company Firm Stock) and
each Selling Stockholder (with respect to the Selling Stockholder
Firm Stock to be sold by such Selling Stockholder) shall deliver or
cause to be delivered the Firm Stock to the Representatives for the
account of each Underwriter against payment to or upon the order of
the Company and the Selling Stockholders of the purchase price by
wire transfer in immediately available funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to
this Agreement is a further condition of the obligation of each
Underwriter hereunder.
The option granted in Section 3
will expire 30 days after the date of this Agreement and may be
exercised in whole or in part from time to time by written notice
being given to the Company and the Selling Stockholders by the
Representatives. Such notice shall set forth the aggregate number
of shares of Option Stock as to which the option is being exercised
and the date and time, as determined by the Representatives, when
the shares of Option Stock are to be delivered; provided, however,
that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second business day after the
date on which the option shall have been exercised nor later than
the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as a “ Subsequent
Delivery Date ” and the First Delivery Date and any
Subsequent Delivery Date are sometimes each referred to as a
“ Delivery Date .”
Delivery of and payment for the
Option Stock shall be made at the place specified in the first
sentence of the first paragraph of this Section 5 (or at such
other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time,
on each such Subsequent Delivery Date. On each such Subsequent
Delivery Date, the Company and the Selling Stockholders listed on
Schedule 3 shall deliver or cause to be delivered the Option Stock
to be purchased on such Subsequent Delivery Date to the
Representatives for the account of each Underwriter against payment
to or upon the order of the Company and such Selling Stockholders
of the purchase price by wire transfer in immediately available
funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition
of the obligation of each Underwriter hereunder.
SECTION 6. Further Agreements of
the Company. The Company agrees:
(a) To prepare the Prospectus in a
form approved by the Representatives and to file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than the
Commission’s close of business on the second business day
following the execution and delivery
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of this Agreement or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to
the Registration Statement or to the Prospectus or the Sale
Preliminary Prospectus except as permitted herein; to advise the
Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or
the Sale Preliminary Prospectus or any amended Prospectus or Sale
Preliminary Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement, the Prospectus or the Sale Preliminary Prospectus or for
additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of
the Representatives and to counsel for the Underwriters, upon
request, a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with
the Commission, including all conformed consents and exhibits filed
therewith;
(c) To deliver promptly to the
Representatives such number of the following documents as the
Representatives shall reasonably request: (i) conformed copies
of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding
exhibits) and (ii) each Preliminary Prospectus, the Prospectus
and any amended or supplemented Prospectus and Sale Preliminary
Prospectus; if the Sale Preliminary Prospectus is being used to
solicit offers to purchase the Stock at a time when the Prospectus
is not yet available and any event shall occur or condition exist
as a result of which it is necessary to amend or supplement the
Sale Preliminary Prospectus in writing in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, or if, in the opinion of counsel
for the Underwriters, it is necessary to amend to amend or
supplement the Sale Preliminary Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to any dealer
upon request, either amendments or supplements to the Sale
Preliminary Prospectus so that the statements in the Sale
Preliminary Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Sale Preliminary Prospectus
is delivered to a prospective purchaser, be misleading or so that
the Sale Preliminary Prospectus, as amended or supplemented, will
comply with applicable law; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with
the offering or sale of the Stock or any other securities relating
thereto and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the Securities Act, to notify
the Representatives and, upon their request, to prepare and file
such amendment or supplement to the Prospectus and to
furnish
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without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from
time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file as promptly as
practicable with the Commission any amendment to the Registration
Statement, the Prospectus or the Sale Preliminary Prospectus or any
supplement to the Prospectus or the Sale Preliminary Prospectus
that may, in the judgment of the Company or the Representatives, be
required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the
Commission any amendment to the Registration Statement or
supplement to the Prospectus or the Sale Preliminary Prospectus or
any Prospectus pursuant to Rule 424 of the Rules and Regulations,
to furnish a copy thereof to the Representatives and counsel for
the Underwriters and obtain the consent of the Representatives to
the filing;
(f) As soon as practicable after the
Effective Date, to make generally available to the Company’s
stockholders and to deliver to the Representatives an earnings
statement of the Company (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158 of
the Rules and Regulations);
(g) For a period of five years
following the Effective Date, to make available to the
Representatives copies of all materials furnished by the Company to
its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal
national securities exchange or automatic quotation system upon
which the Common Stock may be listed or quoted pursuant to
requirements of or agreements with such exchange or automatic
quotation system or to the Commission pursuant to the Exchange Act
or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to
take such action as the Representatives may reasonably request to
qualify the Stock for offering and sale under the securities laws
of such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Stock; provided that
in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction in which it is not otherwise
subject;
(i) For a period of 90 days from the
date of the Prospectus (the “ Lock-Up Period ”),
not to, directly or indirectly, offer, sell, pledge, contract to
sell (including any short sale), grant any option to purchase or
otherwise dispose of any shares of Common Stock (other than
(i) stock awards granted pursuant to the Company’s
equity incentive plans, which plans are described in the
Prospectus, (ii) the issuance of shares of Common Stock upon
exercise of stock awards granted pursuant to such equity incentive
plans, (iii) the issuance of Common Stock in connection with
any acquisition of another company of all or a portion of its stock
or assets; provided that such shares of Common Stock, when taken
together with all such other shares of Common Stock issued pursuant
to this clause (iii), do not, or would not upon conversion or
exchange (to the extent securities convertible or exchangeable for
Common Stock are issued in
14
such transaction), represent more than 15% of
the Company’s then outstanding shares of Common Stock, that
such securities are issued in connection with a transaction not
requiring registration under the Securities Act and that such
shares are subject to the same restrictions on sale set forth in
this Section 6(i)), or enter into any Hedging Transaction (as
defined below) relating to the Common Stock, in each case without
the prior written consent of Thomas Weisel Partners LLC on behalf
of the Underwriters; provided, however, that if (a) during the
last 17 days of the 90-day Lock-Up Period the Company issues an
earnings release or material news or a material event relating to
the Company occurs, or (b) prior to the expiration of the
90-day Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day
of the 90-day Lock-Up Period, in each case the restrictions imposed
by this Section 6(i) shall continue to apply, and the Lock-Up
Period will be extended, until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence
of the material news or material event, unless Thomas Weisel
Partners LLC on behalf of the Underwriters waives, in writing, such
extension; and to cause each officer listed on Schedule 7 hereto
and each director of the Company to furnish to the Representatives,
prior to the First Delivery Date, a letter or letters,
substantially in the form of Exhibit A hereto. The Company shall
promptly notify Thomas Weisel Partners LLC of any earnings release,
news or event that may give rise to an extension of the initial
90-day Lock-Up Period. “Hedging Transaction” means any
short sale (whether or not against the box) or any purchase, sale
or grant of any right (including, without limitation, any put or
call option) with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock);
(j) To apply for the listing of the
Stock on the Nasdaq National Market, and to use its best efforts to
complete that listing prior to the First Delivery Date;
(k) To apply the net proceeds from
the Transactions as set forth in the Prospectus;
(l) To take such steps as shall be
necessary to ensure that neither the Company nor the Subsidiary
shall become an “investment company” as defined in the
Investment Company Act of 1940, as amended, for a period of seven
years from the date of the Prospectus;
(m) To maintain a transfer agent
and, if necessary under the jurisdiction of incorporation of the
Company, a registrar for the Stock;
(n) To not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company;
(o) To not prepare or use a Free
Writing Prospectus in connection with the offering and sale of the
Stock or take any actions that would require the Company or the
Underwriters to file a Free Writing Prospectus pursuant to Rule 433
of the Rules and Regulations, in each case, without the prior
consent of Thomas Weisel Partners LLC;
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(p) To comply with the requirements
of Rule 433 under the Securities Act applicable to any Issuer
Free Writing Prospectus, including timely filing with the
Commission or retention where required and legending, and to
satisfy the conditions under Rule 433 to avoid a requirement
to file with the Commi
